Beyond Budgeting
Beyond Budgeting | Managerial Accounting – AVIMA 11 | | Henrique Antunes de Souza | Jan/2013 |
Contents Introduction: 2 The Traditional Budgeting 2 Beyond Budgeting: The Concept 4 Beyond Budgeting: The Benefits and a Comparative Analysis 5 Implementation 9 Conclusion 10 Bibliography 12
Introduction:
A concept may go through changes over time, being reconsidered, reviewed, improved or even forgotten. In an environment where changes happen often, it’s usual to observe concepts and models being worn out and new or adapted approaches being introduced.
In the field of business administration, the budgeting process has proved to be fundamental and highly recommended as a successful way of planning and controlling. Nonetheless, the current dynamic corporate environment has shown signs that the traditional budgeting no longer fits a company’s aim or it could even be an obstacle to growth. Considered to be an inflexible, a complex and a costly approach, the introduction of a new management instrument was charted (Frezatti, 2005).
In order to better understand how executives foresaw the need of a new tool to better manage their companies, this paper will begin by discussing the traditional method of budgeting itself, followed by an analysis of the downsides and flaws identified by such approach. Thereby, after highlighting the ineffectiveness of the traditional method, an introduction of the Beyond Budgeting will be presented, showing the definition and principles of such scheme.
Furthermore, in order to establish an in-depth investigation of the Beyond Budgeting, a comparative analysis with the previous approach will be provided along with the outcome, considering the benefits of such process as well as the possible pitfalls, leading to the conclusion of the paper.
The Traditional Budgeting
This section aims to describe the main aspects and downsides surrounding the traditional approach of a budget, thereby allowing the reader to
Contents Introduction: 2 The Traditional Budgeting 2 Beyond Budgeting: The Concept 4 Beyond Budgeting: The Benefits and a Comparative Analysis 5 Implementation 9 Conclusion 10 Bibliography 12
Introduction:
A concept may go through changes over time, being reconsidered, reviewed, improved or even forgotten. In an environment where changes happen often, it’s usual to observe concepts and models being worn out and new or adapted approaches being introduced.
In the field of business administration, the budgeting process has proved to be fundamental and highly recommended as a successful way of planning and controlling. Nonetheless, the current dynamic corporate environment has shown signs that the traditional budgeting no longer fits a company’s aim or it could even be an obstacle to growth. Considered to be an inflexible, a complex and a costly approach, the introduction of a new management instrument was charted (Frezatti, 2005).
In order to better understand how executives foresaw the need of a new tool to better manage their companies, this paper will begin by discussing the traditional method of budgeting itself, followed by an analysis of the downsides and flaws identified by such approach. Thereby, after highlighting the ineffectiveness of the traditional method, an introduction of the Beyond Budgeting will be presented, showing the definition and principles of such scheme.
Furthermore, in order to establish an in-depth investigation of the Beyond Budgeting, a comparative analysis with the previous approach will be provided along with the outcome, considering the benefits of such process as well as the possible pitfalls, leading to the conclusion of the paper.
The Traditional Budgeting
This section aims to describe the main aspects and downsides surrounding the traditional approach of a budget, thereby allowing the reader to
Bibliography: Campos, J. C., & Krom, V. (2006). Beyond Budgeting - Uma Alternativa de Gestão Financeira Além dos Orçamentos . X Encontro Latino Americano de Iniciação Científica, (pp. 3094-3097). São José dos Campos. Daum, J. H. (2002, July). Juergen Daum. Retrieved January 15, 2013, from Juergen Daum: http://www.juergendaum.de/articles/beyond_budgeting.en.pdf Fraser, R., & Hope, J. (2001, October). Hpartner. Retrieved January 14, 2013, from Hpartner: http://www.hpartner.com/pdf/Beyond_Budgeting.pdf Frezatti, F. (2005, April). Beyond Budgeting: Inovação ou Resgate de Antigos Conceitos do Orçamento Empresarial? RAE, pp. 23-33. Hofstede, G. (2013). Geert Hofstede. Retrieved January 16, 2013, from The Hofstede Centre: http://geert-hofstede.com/dimensions.html Hope, J., & Fraser, R. (2003). Beyond Budgeting: How Managers Can Break Free from the Annual Performance Trap. Boston: Harvard Business Press. Rothberg, A. F. (2011). CFO Edge. Retrieved January 15, 2013, from CFO Edge: http://www.cfoedge.com/resources/articles/CFO-Edge-Traditional-Budgeting-vs-Beyond-Budgeting.pdf